Vietnam’s food and beverage (F&B) industry has demonstrated remarkable resilience amid ongoing economic headwinds, with total revenue reaching approximately VND688.8 trillion ($26.96 billion) in 2024, a 16.6 per cent increase compared to 2023, according to the 2024 F&B Market Business Report released by iPos.vn on March 18.

However, the report also revealed a significant disparity in business performance across the industry. While the overall market recorded strong growth, only 40.2 per cent of businesses achieved stable or increasing revenues, whereas nearly 60 per cent struggled to maintain profitability or faced revenue declines. This indicates that not all enterprises were able to fully capitalize on the industry’s upwards trajectory. “The market is becoming increasingly polarized, with advantages favoring brands that have well-structured business strategies and long-term development plans,” the report noted.

Uneven growth

Vietnam’s F&B industry experienced a clear divergence between the first and second halves of the year in 2024, according to the report. In the first half, total revenue reached VND403.9 trillion ($15.81 billion), driven in part by the late arrival of the Lunar New Year, or Tet, holiday.

However, the second half presented a more challenging landscape. Despite Vietnam’s economy entering a recovery phase, the pace of consumer spending growth declined sharply. It was not until November, when the market entered the year-end festive season, that revenue showed signs of a rebound.

In terms of market expansion, the total number of F&B establishments in the country was estimated at 323,010 as of the end of 2024, reflecting a modest 1.8 per cent increase compared to the previous year. This growth, however, remains notably lower than the 3.1 per cent recorded in 2023, signaling that the industry is still undergoing a period of adjustment following recent economic hardships.

Vietnam’s F&B industry continues to face significant challenges, particularly the pressure of maintaining profit margins amid rising operational costs. Businesses are being forced to rethink their models and implement flexible strategies to ensure stability and long-term sustainability.

A nationwide survey of 4,005 F&B establishments by Nestlé Vietnam and iPOS.vn revealed that only 25.5 per cent of businesses managed to maintain stable revenue compared to the same period in 2023, while just 14.7 per cent reported growth. These figures highlight the uneven nature of the industry’s recovery and the difficulties many businesses face in adapting to market dynamics.

One of the key issues facing struggling businesses is the lack of flexibility in their operational models. Many establishments that fail to keep up with emerging trends, rely on intuition-based decision-making, or lack a clear long-term strategy are at risk of being phased out.

2024 marked a period of natural market consolidation, as many underperforming independent establishments were forced to shut down due to high operational costs and weakened consumer spending. In contrast, larger F&B chains demonstrated greater resilience, benefiting from optimized operational strategies and stronger financial management, the report stated.

The primary driver of these challenges is intensifying competition, as consumers now have more choices than ever before. At the same time, businesses are grappling with rising costs for raw materials, labor, and overall operations, while their ability to raise prices remains limited.

Consumer sentiment has shifted towards price sensitivity, and brands are increasingly competing through promotions and discount programs, the report noted. This trend has been further amplified by the rapid expansion of online food delivery platforms such as ShopeeFood and GrabFood, which have reshaped pricing strategies and heightened competition within the industry.

Delicate balance

In 2024, 44.8 per cent of F&B businesses reported that raw material costs accounted for at least 30 per cent of their selling prices, with 6.2 per cent saying they exceeded 50 per cent, pushing profit margins into the critical zone.

On the other hand, only 24.8 per cent of businesses managed to keep raw material costs below 20 per cent of their selling prices, highlighting the mounting pressure from rising input costs. This surge has forced establishments to adapt quickly. The spike in ingredient prices is driven by multiple factors, including inflation, escalating transportation costs, supply shortages, exchange rate fluctuations, and rising employee wages.

To cope with these challenges, some F&B businesses have implemented price increases of 5 to 15 per cent, optimized their product offerings and portion sizes, sought new suppliers, and leveraged technology for cost management.

Looking ahead, raw material cost pressures show no signs of easing in the short term, requiring F&B businesses to adopt even more flexible strategies.

Striking the right balance between pricing, profitability, and consumer purchasing power will be a critical challenge in 2025 as the market grows increasingly competitive, the report warned.

Commenting on the prospect of price increases in 2025, Mr. Nguyen Thai Binh, Co-founder of Concepts - VCS Academy, emphasized the need for F&B businesses to exercise careful consideration. While input costs continue to rise, consumer purchasing power remains weak, making abrupt price hikes a risky move that could hurt sales as customers become increasingly cautious with their spending. “Instead of implementing across-the-board price increases, businesses should focus on cost optimization by negotiating with suppliers, adjusting recipes, or modifying portion sizes,” Mr. Binh suggested.

He further advised that if price adjustments are unavoidable, a flexible pricing strategy should be applied, taking into account regional differences, customer segments, and product value enhancements to maintain competitiveness and consumer appeal.

As operational costs continue to rise, the adoption of technology has become a critical factor in helping F&B businesses streamline operations, enhance the customer experience, and maintain a competitive edge. From customer data management and workflow optimization to personalized services, technology plays a vital role in improving business efficiency and adapting to modern consumer trends.

Technology is increasingly becoming an essential tool for traditional restaurants to boost efficiency while preserving their unique identity and service culture. This distinctiveness serves as the core value of a business, shaping products and services that leave a lasting impression. However, in order to optimize operations, drive revenue growth, and reduce costs, integrating technology into business processes is no longer an option, it has become a necessity.

On March 19, at the “Solutions for Developing F&B Chain Models Combining Traditional Culture with Technology and Innovation” seminar, held as part of the Food & Hospitality Hanoi 2025 exhibition, Mr. Anthony Tuan Phan, Founder and CEO of AIAIVN, emphasized that technology is not only a tool for improving operations but also a powerful enabler for systematic data collection and management in the F&B industry. “With the help of technology, customer information can be gathered quickly, and their feedback processed in a structured manner,” he noted. “This allows restaurants to analyze insights more effectively and make informed adjustments to their business strategies.”

Mr. Hoang Tung, Chairman of F&B Investment, is of a similar mind, emphasizing that customer data is a valuable asset for businesses. However, if not collected and utilized effectively, companies risk missing out on opportunities to enhance the customer experience and drive revenue growth. “Thanks to solutions like online surveys and QR codes, restaurants can gather customer feedback immediately after their meal,” he said. “By analyzing this data, businesses can gain deeper insights into consumer behavior, personalize experiences, and even remember customers’ past orders. This helps to improve service quality and create a sustainable competitive advantage.”

Technology has become a critical tool for optimizing business operations, allowing F&B companies to focus on enhancing the customer experience and driving revenue growth. With challenges ahead, Vietnamese F&B businesses must adapt to meet the increasingly demanding expectations of consumers.